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The furlough scheme is currently in the process of being phased out as the economy reopens in the wake of the COVID-19 induced lockdown. In this phase, businesses have a variety of options available to them in terms of how to un-furlough their workforce and there are also various incentives for keeping them in work long term. Here’s the key things you need to know about the scaling back, and eventual end, of furlough.

July: Flexible furlough

The Chancellor has outlined the terms for a new kind of furlough, the ‘flexible’ furlough, which is now available if employer and employee agree on terms. This means they can begin to work some of their usual hours while still receiving furlough payments for their remaining hours. This allows businesses to scale their workforces return in the most efficient way, although it is encouraged that businesses attempt to bring back as much of their workforce as is safe to do, with appropriate social distancing provisions etc.. This scheme can be applied for through the usual HMRC Job Retention Scheme, but only if the employee in question was put on furlough before 10 June 2020 or for a minimum three weeks before or ending on 30 June 2020. There are allowances made for those on maternity, paternity, sick leave and other mitigating circumstances. A ‘flexible furlough agreement’ must also be put into a written document for reference. This document should be retained by the company for five years. Furthermore, a written record of how many hours an employee has worked along with how many hours they are on furlough should be kept as well for future reference and auditing.

August and September: National Insurance, pensions and reduced furlough wages

From August, employers will no longer be able to claim a grant for national insurance and pension contributions. This means that they will need to be paid by the employer themselves. While a relatively minor change compared to other scale backs, this will have a large impact for bigger businesses with lots of employees or smaller ones with highly paid employees. Be sure to factor this in when doing your accounts for August.

Furthermore, from 1 to 30 September, the Government will drop the percentage of wages they pay as part of the programme. The Government will begin paying 70% of total wages, as opposed to the 80% they’ve been paying up to this point. This means employers will have to pay the lost 10% of wages to their furloughed employees. Again, be sure to factor this in if you intend to keep your employers on furlough past this date.

October: Further reduction in Government share of payments and the Job Retention Scheme.

In October, the Government will once again reduce their share of the furlough payments to 60%, again meaning employers will have to pay a larger share to make up. However, the Government have also announced a Job Retention Scheme, with provides a variety of benefits and bonuses to companies that retain employees after furlough. These include £1000 for every employee brought back from furlough that remains in work till January 2021, with the bonuses paid from February 2021. This is to stave off any potential redundancies that would occur due to losses incurred from the pandemic. This scheme is seriously worth looking at for any employer that may be looking into redundancies due to the pandemic as assisting in keeping in the wider economy afloat through maintaining employment is of paramount importance for the continued success of all businesses.

These are the headlines from the Chancellor’s latest statement and is by no means exhaustive in terms of the details and any potential caveats and exemptions. Check the HMRC website for all the details.

Minc offer a range of services that can help you make the most of the available schemes and to bring back your employees in the most efficient, cost-effective and constructive ways. From consultancy on how to bring your staff back from furlough, to performing the administrative tasks to supporting you to make use of the various schemes, minc can help you through these unprecedented times. Find out more here.

Outsourcing

Due to the importance of data security for the continued success of any business, the most productive and effective method of ensuring your security is to outsource any new programme or implementation. The potential risks of a poor cybersecurity operation mean this is something you can’t afford to get wrong, so consider bringing in some experts to ensure your continued security. Minc offers a range of IT consultancy and outsourcing services, find out more here.